Counties face loss of revenue if Congress doesn’t act on PILOT

Published: Thursday, January 9, 2014 at 4:30 a.m.

Last Modified: Wednesday, January 8, 2014 at 6:46 p.m.

A federal program to compensate Western North Carolina counties with large swaths of non-taxable public lands is in jeopardy if Congress doesn’t act soon to restore its funding.

Transylvania County stands to lose about $200,000 this year if the “payment in lieu of taxes” program administered by the U.S. Department of the Interior isn’t fully funded during ongoing budget negotiations between the U.S. House and Senate.

Henderson County, which receives about $47,000 per year to offset non-taxable U.S. Forest Service property in the Mills River area, would also face a loss of revenue.

Discussing the issue with commissioners Monday, County Manager Steve Wyatt said the funding is “a big deal,” especially for counties further west. Statewide, the PILOT program paid out $3.99 million in 2013 to 43 counties with federal land in their jurisdictions.

A bipartisan budget agreement reached in December by Congressman Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) included a “placeholder” for the PILOT program but didn’t specify any funding. Mandatory funding provided for PILOT by a 2012 transportation bill expired last June.

For WNC counties with large amounts of untaxable federal land, PILOT is considered an essential revenue source for local schools, infrastructure work, law enforcement, fire and rescue operations and health care.

In Transylvania, 89,310 acres — or roughly 37 percent of the county — is federal land and thus out of the property tax base. When combined with state lands such as Gorges State Park, almost half of the county is non-taxable and undevelopable.

County Manager Artie Wilson said Transylvania’s PILOT funding amounts to “a third of a cent on our tax rate.” If Congress doesn’t fund the program, Wilson said county commissioners would have to look at taking $200,000 out of fund balance this fiscal year to cover the missing revenue.

“It’s definitely significant to our county,” Wilson said. Fortunately, he added, Transylvania County “did better than was anticipated last year as far as revenues and expenditures, so we did build up the fund balance a little bit.”

Moreover, after talking with Congressman Mark Meadows (R-Cashiers) and other elected officials, Wilson said there’s reason for optimism.

“My understanding in talking with the folks in Congress and others is they’re working to make some changes and add some things back in,” he said. “We’re hopeful that happens. It not only affects us, but it affects counties throughout our state and country.”

Last month, Meadows signed onto a letter urging budget conferees to preserve the PILOT program. Although the Ryan/Murray budget pact didn’t address PILOT’s long-term sustainability, Meadows said he’s optimistic the House and Senate will reach a deal during the ongoing appropriations process for fiscal year 2014.

“I look forward to working with my colleagues to ensure PILOT is protected in order to give the counties in the 11th District that depend on this program the certainty they need when crafting their annual budgets,” he said.

Last month, Sen. Kay Hagan joined 16 senators from both parties in signing a letter asking congressional appropriators to “fully support” the program relied on by nearly 1,900 counties in 49 states. If approved, the program would contribute $425 million to rural counties in 2014 to offset the loss of property taxes.

“We urge you to consider the economic hardship and uncertainty that counties across the nation will face if the PILOT program is not given consistent funding,” wrote the group of senators.

Chris Moyer, a spokesman for Hagan, said he expects something will be announced regarding the 2014 PILT funding “within the next week.”

<p>A federal program to compensate Western North Carolina counties with large swaths of non-taxable public lands is in jeopardy if Congress doesn't act soon to restore its funding. </p><p>Transylvania County stands to lose about $200,000 this year if the “payment in lieu of taxes” program administered by the U.S. Department of the Interior isn't fully funded during ongoing budget negotiations between the U.S. House and Senate.</p><p>Henderson County, which receives about $47,000 per year to offset non-taxable U.S. Forest Service property in the Mills River area, would also face a loss of revenue. </p><p>Discussing the issue with commissioners Monday, County Manager Steve Wyatt said the funding is “a big deal,” especially for counties further west. Statewide, the PILOT program paid out $3.99 million in 2013 to 43 counties with federal land in their jurisdictions.</p><p>A bipartisan budget agreement reached in December by Congressman Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) included a “placeholder” for the PILOT program but didn't specify any funding. Mandatory funding provided for PILOT by a 2012 transportation bill expired last June. </p><p>For WNC counties with large amounts of untaxable federal land, PILOT is considered an essential revenue source for local schools, infrastructure work, law enforcement, fire and rescue operations and health care. </p><p>In Transylvania, 89,310 acres — or roughly 37 percent of the county — is federal land and thus out of the property tax base. When combined with state lands such as Gorges State Park, almost half of the county is non-taxable and undevelopable.</p><p>County Manager Artie Wilson said Transylvania's PILOT funding amounts to “a third of a cent on our tax rate.” If Congress doesn't fund the program, Wilson said county commissioners would have to look at taking $200,000 out of fund balance this fiscal year to cover the missing revenue.</p><p>“It's definitely significant to our county,” Wilson said. Fortunately, he added, Transylvania County “did better than was anticipated last year as far as revenues and expenditures, so we did build up the fund balance a little bit.”</p><p>Moreover, after talking with Congressman Mark Meadows (R-Cashiers) and other elected officials, Wilson said there's reason for optimism.</p><p>“My understanding in talking with the folks in Congress and others is they're working to make some changes and add some things back in,” he said. “We're hopeful that happens. It not only affects us, but it affects counties throughout our state and country.”</p><p>Last month, Meadows signed onto a letter urging budget conferees to preserve the PILOT program. Although the Ryan/Murray budget pact didn't address PILOT's long-term sustainability, Meadows said he's optimistic the House and Senate will reach a deal during the ongoing appropriations process for fiscal year 2014.</p><p>“I look forward to working with my colleagues to ensure PILOT is protected in order to give the counties in the 11th District that depend on this program the certainty they need when crafting their annual budgets,” he said.</p><p>Last month, Sen. Kay Hagan joined 16 senators from both parties in signing a letter asking congressional appropriators to “fully support” the program relied on by nearly 1,900 counties in 49 states. If approved, the program would contribute $425 million to rural counties in 2014 to offset the loss of property taxes.</p><p>“We urge you to consider the economic hardship and uncertainty that counties across the nation will face if the PILOT program is not given consistent funding,” wrote the group of senators.</p><p>Chris Moyer, a spokesman for Hagan, said he expects something will be announced regarding the 2014 PILT funding “within the next week.”</p><p>Reach Axtell at 828-694-7860 or than.axtell@blueridgenow.com.</p>